Hill is now considering plan C. Beginning inventory, stockout costs, and holding costs are provided in problem 13.3:
In problem 13.3: The president of Hill Enterprises, Terri Hill, projects the firm’s aggregate demand requirements over the next 8 months as follows:

Her operations manager is considering a new plan, which begins in January with 200 units on hand. Stockout cost of lost sales is $100 per unit. Inventory holding cost is $20 per unit per month. Ignore any idle-times costs. The plan is called plan A.
Plan A: Vary the workforce level to execute a “chase” strategy by producing the quantity demanded in the prior month. The December demand and rate of production are both 1,600 units per month. The cost of hiring additional workers is $5,000 per 100 units. The cost of laying off workers is $7,500 per 100 units. Evaluate this plan.

(a) Plan C: Keep a stable workforce by maintaining a constant production rate equal to the average requirements and allow varying inventory levels.
(b) Plot the demand with a graph that also shows average requirements. Conduct your analysis for January throughAugust.

  • CreatedJuly 23, 2013
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